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November 28, 2023

Kenya's enactment of new laws moves towards Universal Health Coverage

  • On 19 October 2023, the president officially signed into law four legislative acts (Acts) that aim to broaden the scope of public healthcare, provide healthcare and financial protection to all Kenyan citizens and long-term residents, and bring about significant changes in healthcare financing and administration.
  • Three of the Acts became effective in November 2023; this Alert highlights these three new laws.
  • Prior to these reforms, public healthcare coverage was mandatory for formal employees, with funding derived from their contributions to the National Health Insurance Fund.

Executive summary

Three healthcare related legislative acts (Acts) signed into law in Kenya became operational this month (November 2023). The new laws aim to broaden the scope of public healthcare, provide healthcare and financial protection to all Kenyan citizens and long-term residents, while also bringing about significant changes in healthcare financing and administration.

Following enactment of the new laws, on 27 November 2023 the High Court of Kenya issued a conservatory order restraining the government and its agents from implementing and or enforcing the relevant Acts of Parliament until 7 February 2024, effectively postponing implementation of these new healthcare laws.

Kenya has made notable progress in its pursuit of universal health coverage (UHC) through enactment of four acts (one of which is not yet effective). These Acts, namely the Primary Health Care Act, Digital Health Act, Facility Improvement Financing Act and Social Health Insurance Act, are aimed at revolutionizing the healthcare sector in the country. The Primary Health Care Act and the Digital Health Act became operational on 2 November 2023, and the Social Health Insurance Act came into operation on 22 November 2023.

The Social Health Insurance Act established the Social Health Authority under which three funds have been created: the Primary Healthcare Fund, the Social Health Insurance Fund and the Emergency, Chronic, and Critical Illness Fund. All the funds, assets and other property held by National Health Insurance Fund (NHIF) Board vested in the Social Health Authority effective 22 November 2023. The NHIF Board is required to wind up the National Hospital Insurance Fund within one year from the stated effective date but the National Health Insurance Fund Act, 1998 is repealed.

This alert provides details on the three Acts that became operational in November, and emphasizes the provisions that will have a significant impact on Kenyan citizens, foreign nationals and employers.

Detailed discussion

The Primary Health Care Act 2023

Kenya has made significant strides in its efforts to achieve UHC by implementing various strategies. The Kenya Primary Healthcare Strategic Framework 2019–2024 places a strong emphasis on primary health care (PHC) as the key driver for achieving UHC. Additionally, the Community Health Policy 2020–2030 recognizes community health as a crucial entry point into the overall health system. However, it highlights the need for a legal framework to ensure proper remuneration for community health workers, who have historically relied on donor funding. To address these challenges, the government has enacted the Primary Health Care Act, which aims to strengthen PHC as part of a comprehensive health legislation package to advance UHC. One of the key provisions of the Act establishes primary care networks (PCNs) and formalizes community health delivery through community health promoters organized in community health units.

The Digital Health Act 2023

The main objective of the Digital Health Act is to provide a solid legal foundation for healthcare financing, service provision and UHC, while also enhancing the legal framework surrounding these areas. One key provision of the Act establishes the Digital Health Agency, which is tasked with creating a Comprehensive Integrated Health Information System.

The Social Health Insurance Act, 2023

The Social Health Insurance Act, 2023 (SHI Act) introduces a comprehensive scheme for social health insurance, aiming to provide financial protection and equal access to healthcare services.

The Social Health Authority

The SHI Act establishes the Social Health Authority (SHA) to, in part:

  • Register the beneficiaries
  • Manage certain funds established under the SHI Act
  • Receive all contributions and other payments required by the Act to be made to the funds
  • Enroll and contract healthcare providers and healthcare facilities upon inspection, licensing and certification of the healthcare providers and healthcare facilities by the relevant body
  • Consider and make payments to contracted healthcare providers and healthcare facilities out of the funds

The SHI Act establishes three new funds as highlighted below:

1) Primary Healthcare Fund

This fund will focus on procuring primary services from healthcare facilities. The fund shall receive contributions from:

  • Monies appropriated by the National Assembly
  • Any grants, gifts, donations or bequests
  • Monies allocated for those purposes from fees or levies administered
  • Monies accruing to or received by the Fund from any other source

2) Emergency, Chronic, and Critical Illness Fund

This fund will address emergency and chronic illness costs once the social health insurance benefits are exhausted. It serves as a safety net for individuals facing significant healthcare expenses due to unforeseen emergencies or long-term chronic conditions. The fund shall receive contributions from:

  • Monies appropriated by the National Assembly
  • Any grants, gifts, donations or endowments
  • Monies from any other lawful source

3) Social Health Insurance Fund

The Social Health Insurance Fund will cover services provided by healthcare facilities. The following monies shall be paid into the Fund:

  • Contributions under the Act
  • Monies appropriated by the National Assembly for indigent and vulnerable persons
  • Gifts, grants, innovative financing mechanisms or donations

Persons liable to register as members of the Fund:

  • Every Kenyan
  • A non-Kenyan who is ordinarily resident in Kenya
  • A child born after commencement of the SHI Act

Registration shall be conducted continuously at various points in such manner as shall be prescribed by the Cabinet Secretary (CS).

Any non-Kenyan who intends to enter and remain in the territory of Kenya for a period of less than 12 months must be in possession of travel health insurance coverage as may be designated by the CS.

Persons liable to contribute to the Fund:

  • Every Kenyan household
  • A non-Kenyan resident, ordinarily residing in Kenya for a period exceeding 12 months
  • The national government
  • County governments
  • Any other employer

How contributions are paid to the Fund:

  • For salaried employment, through a monthly statutory deduction from the wages or salary by the employer at a rate prescribed by the SHI Act
  • For a household whose income is not derived from salaried employment, by an annual contribution of a proportion of household income as determined by the means-testing instrument in the manner prescribed by the Act
  • For households that need financial assistance as determined by the means-testing instrument, by the government
  • For persons under lawful custody, by the government from funds appropriated by Parliament for that purpose at a rate prescribed under the Act
  • For a permanent resident in Kenya, by that person at a rate as may be prescribed under the Act
  • For any other person, by the person himself out of his own funds in the manner prescribed under the Act

**Please note that the above-stated contributions must be paid at the time of registration.

Offences and penalties

Failure to make timely contribution payments will result in a penalty equivalent to 2% of the unpaid contribution for the period in question and the total annual contribution.

Any employer who fails to pay any contributions to the fund as a contributing employer or who makes unauthorized deductions from employees shall be liable for a fine not exceeding two million Kenya Shillings (KES 2m) or to imprisonment for a term not exceeding three years. Any person who, for the purpose of obtaining a benefit, makes any false statements or representation shall also be liable to a similar fine or imprisonment.

Rates of contributions to the Social Health Insurance Fund

The CS in consultation with the board will draft regulations to prescribe the amount and rates of contributions payable to the Fund. As at the date of this alert, the CS has not issued any regulations.

Next steps

All Kenyan citizens, all foreigners who are ordinarily resident in Kenya and all persons including employers who are liable to contribute to the Social Health Insurance Fund should look out for notices and/or regulations prescribing the registration process, rates of contributions, the due dates for the contributions and all matters incidental to the contributions.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Kenya), Nairobi

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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